What are Some Perilous Pitfalls in Business Succession Planning?

Businesses require careful succession planning.

Do you have a business?

If yes, do you have a plan in place for the challenges life throws at you?

According to a recent Kenosha News article titled “Five events that can ruin a succession plan” your business will not survive without a plan.

Your business likely is your financial security and your retirement plan.

You need to protect it.

How do you do this?

Address the five D’s of succession planning.

Death.

Your death does not mean your business needs to die with you.

You need to select and train a successor.

Create a plan for transitioning leadership.

Purchase business interruption insurance and life insurance to support the business through the transition.

An experienced estate planning attorney can help you create a plan and coordinate with the appropriate insurance professionals to meet the needs of your business.

Disability or Disease.

Some surprises in life are unpleasant.

No one wants to believe an illness or disability will take them away from work.

It can happen.

You should make plans in the event, for whatever reason, you become unable to work or make decisions for the business.

Without safeguards in place, your business could lose value or go under completely.

Divorce.

The love of your life could become your worst nightmare.

Your ex-spouse could take more than your heart.

He or she could take your livelihood.

If you are in the planning stages of your wedding, add "create a prenuptial agreement" to your checklist to protect the business in the event of divorce.

Drama.

Business are comprised of humans.

Where humans exist, drama and conflict may follow.

With no plan in place, your employees will begin to worry about their security.

They may look for other jobs.

They may frighten vendors.

Having a plan in place and communicating this to your employees will help keep drama from starting.

Drive.

You may have many people with great big-picture ideas.

Not everyone works in details, however.

Your success plan should include details and directions for implementation so important operations will not fall through the cracks.

Creating a succession plan protects more than you.

It provides security for your employees and the customers you serve.

Reference: Kenosha News (August 25, 2019) “Five events that can ruin a succession plan”